Public Safety Committee on April 27th, 2010

[C/Supt Joe Oliver]

We have an idea where their factories are located, yes.

[Don Davies, NDP, Vancouver Kingsway, BC]

You do? Do you know specifically where one factory is?

[C/Supt Joe Oliver]

I do not specifically know, but I'm sure our—

[Don Davies, NDP, Vancouver Kingsway, BC]

Does the force know?

[C/Supt Joe Oliver]

Yes, I'm sure there are elements in the RCMP that do know.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay. Well, if they know where the factories are and we know they're illegal—because you're saying there are 50 illegal manufacturing facilities—and we know there's a political promise two years ago that they're going to get serious about the manufacturing, can you explain to our committee why not one has been shut down?

[C/Supt Joe Oliver]

I can't go into the circumstances as to precisely why none, but some of the conditions are that we would require the intelligence precisely that would convince a judge to issue a warrant in those cases; secondly, as I mentioned, when it comes to enforcement operations, we have to be mindful of the impact our actions would have in terms of public and officer safety.

[Don Davies, NDP, Vancouver Kingsway, BC]

Right.

Now we know that the most important source of contraband is on the U.S. side of Akwesasne. Can any of you tell us, if you know, what the Canadian government has done to insist that the U.S. government take action to deal with illegal factories? I'm thinking that surely, if the shoe were on the other foot and illegal cigarettes were flooding the American market, undermining their public health and public health programs and costing them billions of dollars of lost tax revenue, the United States would insist that Canada take action.

Can anybody tell us what the Canadian government has done to get the U.S. government to act on this issue?

[Barry MacKillop]

Certainly from the task force perspective, we've met several times with our colleagues and members from the U.S., particularly with the ATF, which combats tobacco and contraband tobacco issues in the U.S. As well, we have several bilateral relationships with the U.S., as probably every agency here has, and contraband tobacco is often on the agenda when they have discussions. We also have the Canada-United States cross-border crime forum that meets, as well as the mini-crime forum. The crime forum itself is ministerial, and tobacco and contraband tobacco are on the agenda there. So there are ongoing discussions.

Recently the U.S. licensed and brought one of the main manufacturers on the U.S. side into the legitimate fold, I guess. I think some discussions we've had and some of the work we've done with the U.S., either bilaterally or multilaterally, has in fact paid off, and we continue to discuss and move forward with them.

[Don Davies, NDP, Vancouver Kingsway, BC]

Maybe just staying with you, Mr. MacKillop, if those efforts are paying off, do you have any explanation for why contraband tobacco in our country seems to be at a historical high?

[Barry MacKillop]

I think contraband tobacco is essentially a commodity like many other commodities that organized crime will exploit. If they can find smokers, if they can find consumers to buy it, then they will exploit that. As we increase our disruptive efforts and increase our awareness on the intervention/prevention side, the likelihood of organized crime stopping all their activities because it's linked to one issue is small. They will move on to a different commodity.

Contraband tobacco has been lucrative for them, but I think we've seen some results. Some of the results Brenda mentioned we're seeing would suggest that perhaps it's becoming less and less lucrative for them. I think we're having an impact, but organized crime is deeply rooted in this issue, and at this point it's a commodity they can find users and consumers for.

[The Chair, Conservative, Garry Breitkreuz]

Thank you very much.

Mr. Norlock, please.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much.

And thank you to the witnesses for attending.

The next couple of questions will be for Ms. Paine. Alluding to some changes in statistical data with regard to smoking, I wonder if you could give us specific changes, if any, of smoking rates, and in particular smoking rates amongst younger Canadians--if they've come down, if they're up, if they're the same.

[Brenda Paine]

In the regular population...?

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Adults and then young people.

[Brenda Paine]

Smoking rates in the adult population are actually down. Based on our Canadian tobacco use monitoring survey, it's at 18% of the Canadian population, which is just under five million who are smoking now. In the 15- to 17-year-olds, about 10% of the population are smoking. I don't know what that would be in exact numbers.

We have been asking about contraband as well, about whether they have or have not used it in the past year. People are reporting using contraband cigarettes, discount cigarettes, premium brand cigarettes, and they flip back and forth sometimes. About a million of the five million adult smokers have used contraband cigarettes at some point in time in the past year.

That's where, from a public health point of view, we do have a big concern. Price matters on these products, so the lower-priced cigarettes that people can find in the market are going to be more attractive.

About 10% of youth, 15 to 17, smoke, so it's about 30,000 who have reported using contraband.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

I'd like to now bring your attention to Bill C-32 on flavoured tobacco. We know the market that was targeted for that. Maybe you could make a comment on why tobacco companies or manufacturers would produce these products. If you wouldn't mind talking about Bill C-32 from your perspective, what are its goals? Its intent, of course, is to make flavoured tobacco less attractive to our most vulnerable, and you did allude to price. If you wouldn't mind making some comments in that area, I think the folks at home would appreciate that.

[Brenda Paine]

Certainly.

There are three aspects to Bill C-32. The easiest one I'll point to is advertising in weekly and daily publications that youth could pick up at the vending boxes on street corners. Advertising in all Canadian publications for tobacco is now banned. That's the easy step.

The second one was to remove the flavours from the little cigars that were being sold on the market. These are products that were being sold as single-sale product in flavours of blueberry, vanilla, and such. We had seen a huge increase in the sales of those, from a few million to about four million and something a couple of years later, and we know that youth were accessing them because of the statistics we were doing through the surveys as well. So removing those was a second step.

But it was also to package any products that were remaining on the market in 20s, so that if there was a small product that looked like a cigarette, it was packaged the same way we package regular cigarettes, in packages of 20 or 25. Again, for youth we know that price matters. They can't go in and buy something that's a dollar; they'd have to spend five or ten dollars, as they would for a package of cigarettes. This puts the product a little bit out of the price range for them.

Those are the benefits, we thought, of Bill C-32.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Would I be correct in saying that the reason manufacturers would be putting those flavours in cigarettes is basically to get the kids hooked on tobacco so that they would migrate—or graduate, I guess, since we're talking about young people—to the bigger tobacco products, in other words to regular cigarettes and those types of product?

[Brenda Paine]

You're absolutely correct. The flavours mask the taste of the nicotine and the taste of cigarette, so whether or not they go on to other cigarettes or other products, it's the nicotine that is still hooking them in the little cigarette or the little cigar and moving them to want to continue nicotine.

Without these, they could look for other cigarette products, but it's better to get them off the market so that they don't get hooked. We know that if you try a cigarette when you are under the age of 20 and experiment with it, the chances are you will go on to be a smoker at some point in time, but if we can delay youth from smoking until they're about 20 or 21, they may experiment, but the chances of their becoming life-long smokers.... It just doesn't happen.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you very much.

The next question is to Mr. Bertrand, with regard to the new stamp on products. I wonder if you could comment on why we would go to a new stamp. Have there been any studies with regard to the new stamp being successful in its ability to track illegal...? I believe there was some counterfeiting going on, etc.

Could you talk about that, please?

[Pierre Bertrand]

Yes, I can. Thank you for the question.

The main reason for the new stamp—and as you are probably aware, the legislation to implement the new stamp is before the House right now, as part of the budget implementation act, C-9—was clearly to deal with the counterfeit that we're seeing coming in from the outside.

The current regime deals with tear tape. This is a sheet of tear tape, with different colours to match with the different provinces. The tear tape says, on the yellow one, “Droit Acquitté—Ontario—Canada Duty Paid”. This tear tape is available to whoever wants to produce it. There are no security features. It's very easy for an illegal manufacturer to avail itself of this.

The reason we're going to the stamp—and what I have here is a bigger version of what is not quite that big—is that it has a number of overt and covert security features. We've done a number of studies. We've done a lot of research before adapting this and going through a request for proposal to give out a contract, which has been given out to Canadian Bank Note in partnership with SICPA, which is a Swiss company that specializes in invisible ink and also specializes in a number of projects around the world with a similar stamp. Their stamps have never been counterfeited. There's a sequential number on it. Each pack will have its sequential number, which allows us to know where the product comes from, if it's seized outside its jurisdiction.

In terms of benefit, clearly there's a CRA or a government benefit in getting the stamp. CRA is going to have an order desk. We're going to be looking at an accountability regime for the stamp linked to the production of each company or importer, linked to the duties they pay, and with all of this will be making a decision as to whether we allow the provider of the stamps to release them to the manufacturers or not.

Thank you.

[Rick Norlock, Conservative, Northumberland—Quinte West, ON]

Thank you.

[The Chair, Conservative, Garry Breitkreuz]

Thank you.

Mr. Kania, please go ahead.

[Andrew Kania, Liberal, Brampton West, ON]

Thank you for being here today.

This report from the RCMP says “until May 2009”. When was it finalized, first of all?